What is the purpose of a title search prior to closing?

What is the purpose of a title search prior to closing?

• A. To estimate the property's market value.
• B. To verify the chain of title and uncover defects or liens to ensure a clear title.
• C. To determine the loan's interest rate.
• D. To set the closing date.

Answer: (B)

Before closing, a title search checks the chain of title and looks for defects or liens that could affect ownership. It reviews public records to confirm who has owned the property and how ownership transfers, and to uncover issues like unpaid liens, claims, or other encumbrances that could cloud title. The goal is to ensure the buyer will receive a clear, marketable title and that the lender’s security interest is protected. If problems are found, they must be resolved before closing (for example, paying off liens or obtaining releases). This step isn’t about estimating value, setting loan interest, or picking a closing date; those come from appraisal, loan terms, and contract scheduling.

Before closing, a title search checks the chain of title and looks for defects or liens that could affect ownership. It reviews public records to confirm who has owned the property and how ownership transfers, and to uncover issues like unpaid liens, claims, or other encumbrances that could cloud title. The goal is to ensure the buyer will receive a clear, marketable title and that the lender’s security interest is protected. If problems are found, they must be resolved before closing (for example, paying off liens or obtaining releases). This step isn’t about estimating value, setting loan interest, or picking a closing date; those come from appraisal, loan terms, and contract scheduling.